Posted:
#826
I can't understand, I was thinking that BTC would rise up since it's digital, no risk of Corona infection with exchange of BTC but it just got down??? What is going on lol
Crypto thread
Posted:
#845
Specifically, Icahn was reported to be shorting the commercial retail market which seems perfectly logical for the next 6 months and perhaps even beyond considering that b&m retail is dying a slow death anyway.
In regard to the markets? Let's just say I'm glad I'm not 100% in crypto rooting for "a bloodbath of epic proportions" in our economic markets.
Gamble for entertainment, invest for wealth!
Posted:
#846
Yeah I thought I read Icahn was shorting commercial so that means he set up camp a year ago and is just pumping his short to benefit himself now.
I think the market is going to force the hand of the FED to open up the international swap lines and commercial paper life support that they want to save the levered world market from collapse.
I read a good article on ZH today discussing the state of the USD shortage and it is super deep in what it discusses but I understood because over the years this funding issue keeps appearing so I have tried to educate myself about it.
In a nutshell the world is reliant on the dollar for funding...not just the US but all countries look to the USD as the rock for currency and funding needs. The root cause of the 2008 drop was this same thing...a dollar shortage and an issue with margin/leverage. When US and world companies and more acutely financial firms and hedge funds lever up to make excess profits they do so using assets and leveraging with dollars...because that is what they need to use to satisfy margin requirements and to secure credit lines/leverage/margin access. So when the financial markets fall just a little or economic slowdown happens just a little those levered firms/companies get margin calls...they need to bring more cash to satisfy the terms of their agreements or they will be sold out and lose their investment. The underlying asset that is secured to the funding can also go down say if it was a real estate holding or a future cash flow stream of an annuity holding or whatever and that decline requires bringing more cash USD to the table to satisfy the agreement and to not be sold out.
Posted:
#847
So back in 2008 the world had a margin call and really a margin call is what crushed Lehman and should have crushed every single disgusting bank including Goldman and JP and Citi and BAC...they were all levered in CDO's and the real estate market both commercial and residential...they had margin calls and needed to bring USD's to the table to not be sold out. The FED opened up access to USD's so the banks and the world could satisfy their margin calls and the market was saved in the process. The FED loosened requirements for what assets could be used for collateral and rigged it so the banks stayed afloat internationally and domestically...and so things calmed down and we survived.
Now the issue is that the underlying problems/plumbing was not fixed back then and hasnt been now. The USD shortage is double worse what it was in 2008, the ammt that foreign firms are needing USD's and of course domestic too is double what it was back at the crash...so there is a worse shortage of dollars now vs then and we saw what happened back then. THAT is why the FED threw out a 1.5 TRILLION dollar backstop because they know the international shortage of USD's is double worse what it was back in 2008...and the markets went down still because it isnt enough. The lifeline thrown out only went to the big players..so the market is trying to force the hand of the FED to re-open the commercial paper swap market and smaller market swap that it did in 2008...so that these financial firms can get the dollars they need to satisfy margin calls and maint requirements. If the FED does this again it will need to be larger than before because the shortage is double what it was...and if so the USD will go in the 90s vs the Yen and lower vs the CHF and lower vs the others but it will save the international margin call we are seeing now. It is also why the Chinese reserve ratio requirement drop made the markets very happy. The Chinese saying that the ratios required for leverage was less means that margin calls are either going to be less or eliminated and the market liked that quite a bit.....
But all of this does not address the problem of leverage or reducing leverage, rather it only reduces the requirements for maintaining the leverage and margin...which means nothing in reality.
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